Question $2.$ Answer the following short questions using Excel $($either the Excel built$-$in functions, or math formulas, or both$).(30$ points in total, $5$ points each$)$

Consider the following cash flows for two mutually exclusive projects at Alberta Biofuel Company. Assume the company's cost of capital is $\backslash (10\backslash \%\backslash )$ :

Project $\backslash ($ A $\backslash )$ requires an initial investment of $\backslash (\backslash$$ $1,800,000\backslash ).$ It will generate a cash inflow of $\backslash (\backslash$$ $1,100,000\backslash )$ at the end of the first year, with cash flows decreasing by $\backslash (15\backslash \%\backslash )$ each year, lasting for a total of four years.

Project B requires an initial investment of $\backslash (\backslash$$ $800,000\backslash ).$ It will generate a cash inflow of $\backslash (\backslash$$ $400,000\backslash )$ at the end of the first year, with cash flows increasing by $\backslash (20\backslash \%\backslash )$ each year, also lasting for four years.

a$.$ Cash Flow

b$.$ Based on the payback period, which project should be taken?

c$.$ If you take the time value of money into consideration, how would you modify the payback period? Do you still reach the same conclusion?

d$.$ Based on the NPV$,$ which project should be taken?

e$.$ Based on the IRR, which project should be taken?

f$.$ Based on this analysis, is incremental IRR analysis necessary? If yes, conduct the analysis.